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Visit this website to read about lobbying.

In the early 2000s, about 40 million people in the United States were eligible for Medicare , a government program that provides health insurance for those 65 and older. On some issues, the elderly are a powerful interest group. They donate money and time to political campaigns, and in the 2012 presidential election, 70% of those over age 65 voted, while just 49% of those aged 18 to 24 cast a ballot, according to the U.S. Census.

In 2003, Congress passed and President George Bush signed into law a substantial expansion of Medicare that helped the elderly to pay for prescription drugs. The prescription drug benefit cost the federal government about $40 billion in 2006, and the Medicare system projects that the annual cost will rise to $121 billion by 2016. The political pressure to pass a prescription drug benefit for Medicare was apparently quite high, while the political pressure to assist the 40 million with no health insurance at all was considerably lower. One reason might be that senior citizens are represented by AARP , a well-funded and well-organized lobbying group, while there is no umbrella organization to lobby for those without health insurance.

In the battle over passage of the 2010 Affordable Care Act (ACA) , which became known as “Obamacare,” there was heavy lobbying on all sides by insurance companies and pharmaceutical companies. However, a lobby group, Health Care for America Now (HCAN) , was financed by labor unions and community groups and was organized to offset corporate lobbying. HCAN, spending $60 million dollars, was successful in helping to get the legislation passed which added new regulations on insurance companies and a mandate that all individuals will obtain health insurance by 2014. The following Work It Out feature further explains voter incentives and lobbyist influence.

Paying to get your way

Suppose Congress proposes a tax on carbon emissions for certain factories in a small town of 10,000 people. The tax is estimated to reduce pollution to such an extent that it will benefit each resident by an equivalent of $300. The tax will also reduce profits to the town’s two large factories by $1 million each. How much should the factory owners be willing to spend to fight the passage of the tax, and how much should the townspeople be willing to pay to support it? Why is society unlikely to achieve the optimal outcome?

Step 1. The two factory owners each stand to lose $1 million if the tax is passed, so each should be willing to spend up to that amount to prevent the passage of the tax, a combined sum of $2 million. Of course, in the real world, there is no guarantee that lobbying efforts will be successful, so the factory owners may choose to invest an amount that is substantially lower.

Step 2. There are 10,000 townspeople, each standing to benefit by $300 if the tax passes. Theoretically, then, they should be willing to spend up to $3 million (10,000 × $300) to ensure passage. (Again, in the real world with no guarantees of success, they may choose to spend less.)

Step 3. It is costly and difficult for 10,000 people to coordinate in such a way as to influence public policy. Since each person stands to gain only $300, many may feel lobbying is not worth the effort.

Step 4. The two factory owners, however, find it very easy and profitable to coordinate their activities, so they have a greater incentive to do so.

Questions & Answers

What is an indifference curve?
layla Reply
different levels of utilities of a person in a given set of bundles of goods
RAM
identify and quantify five social costs and social benefits of building a school
Mokgobo Reply
identify and quantity five social costs and social benefits of building a hospital
Mokgobo
short run vs long run
Jean
state the law of diminishing return?
Ibrahim
The Law of Diminishing (Marginal) Returns simply states that at some point in time a business/operation/etc.'s increased productivity will begin to decline.
The
For example, if a small pizza shop currently has 3 workers in the kitchen at any given time,and hiring 1 more worker will increase productivity, at some number of workers hired will the business see a decrease in productivity because the capital resources that the pizza shop has is not infinite.
The
Five social benefits of building a hospital, in my opinion and depending on where it's built, would be 1) Increased care for neighboring residents, 2) Potential jobs for individuals, 3) May decrease the travel time residents need to endure in order to reach the nearest hospital
The
4) May create work-study programs for individuals who aspire to be future Doctors, Nurses, Physicians, etc. 5) Assuming there are local pharmaceutical businesses nearby, the hospital may decide to purchase supplies local, increasing the business' sales. Thus, generating more income.
The
5 costs of building a hospital would be 1) Increased noise and waste pollution from service vehicles and hospital visitors, 2) May require large amounts of space, possibly jeopardizing nearby animal habitats, 3) May see an increase in traffic and possibly car accidents from frantic individuals
The
racing to see their injured friends, family members, etc. 4) Constructing a hospital and hiring staff is very expensive 5) To use funds, private or public, to finance the construction of a hospital cannot be used to fund any other projects. (The concept of opportunity costs.)
The
what is meant by inteference with the price mechanism operation?
Mugen
is it true that the opportunity cost of unemployed labour is zero?
Wisdom Reply
no
Oigebe
give two forms of collusion
nondumiso Reply
1.Explicit Collusion: Also termed overt collusion, this occurs when two or more firms in the same industry formally agree to control the market .
Gafar
2.Implicit Collusion: Also termed tacit collusion, this occurs when two or more firms in the same industry informally agree to control the market, often through nothing more than interdependent actions. A prime example of implicit collusion is price leadership .
Gafar
explicit collusion: this occurs when two or more firms in the same industry legally agree to control the market
Panashe
implicit collusion this occurs when two or more firms in the same industry illegally agree to control the market
Panashe
what is responsible for investigating cases of collusion
nondumiso
reasons why a country maybe involved in international trade
Nde Reply
state five similarities and differences between money market and capital market
Victoria Reply
Give a Zimbabwean example of firms operating in an oligopoly market and illustrate using diagrams how a manager in such a market maximize profit
Pam Reply
what is an industry
EWAH Reply
An industry is the production of goods and related services within an economy
Prabhu
an industry is place where goods and services are produced for human consumption....
Usman
scarcity is the major course of economics problems. discuss
Abdulhameed Reply
please say about that it is interesting for us
Abayneh
what is economics
Michael Reply
economics is a social sciences that deals with the production distribution and consumption of goods and services produced.its study of behaviour between economic agents
rkesh
what is the formula for elasticity of demand
Ridwan
change in demand/change in variable variable may be price, income,
rkesh
seasonal unemployment
Enoch Reply
example agriculture
lungku
want and scarcity
Prince
why the average of revenue AR fun
Abba
What is monopoli
Gadrey Reply
What is monopoly
Gadrey
monopoly
Hanan
monipoly ..where one firm controls all the market
RAM
what is demand
Jafar Reply
demand is what one willing and enable to purchase at a given price over period of a time.
Micheal
what is marginal revenue
just
distinguish between commercialization and industrialization
Alhassan Reply
why division of labour increase economy level of production
Henry Reply

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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